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Home Care Market – India October 2014
Executive Summary Market
Drivers & Challenges
Trends
Government
Indian FMCG sector is an INR ‘m1’ industry and is growing by a CAGR of ‘r1’% A formidable feature in this sector is the vast distribution network of players Home care industry, a sub-set of the FMCG sector, has been growing at ‘r2’% It is abound with strong presence of multinationals, both domestic and foreign concerns
Drivers
Challenges
Increase in disposable income Rise in organized retail Growing health consciousness Increase in awareness Growth in rural segment Changing lifestyle of consumers
Depreciation of Rupee and rise in energy costs High chemical content
Rise of private labels Improved marketing strategies Product portfolio diversification Product innovation Bureau of Indian Standards regulations Major Players
Competitive Landscape
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
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•Macro-Economic Indicators •Introduction •Market Overview •Segmentation •Supply Chain •EXIM Data •Drivers & Challenges •Government Initiatives •Trends •Competitive Landscape •Strategic Recommendations •Appendix HOME CARE MARKET IN INDIA 2014.PPT
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Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 15
13
d1 c1 b1
12
a1
14
c4 b4 a4
c3 b3 a3
d2 c2 b2 a2
11
Q1
Q2 2010-11
2011-12
Q3 2013-14
2012-13
Q4
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1
t
-2
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
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Despite price hikes, FMCG sector has been able to register positive growth rate FMCG Industry – Overview
FMCG - Market Size and Growth
• FMCG or Fast Moving Consumer Goods is also known as Consumer Packaged Goods (CPG) • It ranks ‘r1’ in terms of being the largest sector in the Indian economy • Between 2012 and 2013 alone, it grew by ‘p1’% • Rising disposable income and increase in organized retail have acted as primary drivers for the growth of this sector • This market has witnessed a rise in demand for premium and luxury products • It has seen heavy foreign direct investments (FDI) which accounted for ‘p2’% of the country’s total FDI over the period Apr 2000 to Mar 2013
INR bn 8,000 6,000 4,000
d
p4% c a
b
2013
2014e
2,000 0
2018e
2020e
Note: Figures are for the respective calendar years
FMCG’s Contribution To GDP (2013) FMCG
FMCG as an industry contributes to ‘p5’% of the GDP in India
Others
• Automatic investment approval of up to ‘p3’% foreign equity is allowed • Low penetration in rural areas pose as a potential opportunity for this sector
HOME CARE MARKET IN INDIA 2014.PPT
p6%
p5%
5
Growing awareness coupled with ease of usage to drive the Indian home care market Home Care Market India – Overview • Home care market in India is expected to grow at a CAGR of ‘p1’% over the next five years • Steady economic growth and increase in awareness about easy to use home cleaning products have emerged as major stimulants to market growth • Marketing campaigns, product promotions and advertisements are crucial to the success of the products in the Indian home care market • Home care sector is also characterized by the presence of both domestic and foreign players who engage in continuous innovation in order to get a greater share of the market
Home Care Market INR bn 500
p1%
400 300
a
b
2013
2014e
c
d
e
f
200 100 0
2015e
2016e
HOME CARE MARKET IN INDIA 2014.PPT
2017e
2018e 6
Segmentation – Summary Home Care
Fabric Wash
Surface Cleaners
Utensil Cleaners
Air Care
Home Insecticides
Fragrance Blocks and Sprays
Toilet Cleaner
Floor Cleaners
Bars, Powders and Liquids
Detergents (Bar/Powder /Liquid)
Fabric Conditioners
Fabric Whiteners
Specialist Surface Cleaners
Vaporizers and Sprays
Coils, Mats and Papers
Repellent Skin Creams
Fabric Starch
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Growing number of organized retail formats are expected to facilitate… Home Care Market – Supply Chain (1/2)
Company
Retailers
Consumers
Home Care – sales through organized formats Retail Format
Description
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Companies
8
Rise in manufacturing activity in India… Exports
Total Exports (Value)
• Over the last four years exports have increased by over ‘p1’% • In FY 2014, ‘c1’ accounted for the highest share of home care exports • The bulk of home care exports is constituted by ‘i1’
INR bn
150
p2%
100
d c
b a
50 0 2011
2012
2013
2014
Note: Figures are for the respective financial years
Exports – Country-Wise Segmentation (2014)
Exports – Country-Wise Segmentation (2013)
k%
Country 1
e%
l%
Country 2 f% j%
h% i%
g%
Country 1 Country 2
Country 3
Country 3
Country 4
Country 5
m%
Country 5
p%
Others
o% n%
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Country 4 Others
9
‌ has resulted in eventual rise in exports HS Codes for Home Care Products
Product Segmentation (2014) a%
HS code
Product 1 b%
Particulars
c%
Product 2 Product 3 Product 4
d%
Product Segmentation (2013) e%
Product 1 f% g%
Product 2 Product 3 Product 4
h% Note: Separate data for insecticides are not available. Data used includes insecticides and other pesticides HOME CARE MARKET IN INDIA 2014.PPT
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Drivers & Challenges – Summary
Drivers Increase in disposable income
Increase in awareness
Challenges
Growing health consciousness
Depreciation of Rupee and rise in energy costs
Rise in organized retail
High chemical content
Growth in rural segment Changing lifestyle of consumers
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Indian Government through Bureau of Indian Standards (BIS)‌ Bureau of Indian Standards regulations (1/2) • Bureau of Indian Standards (BIS) is a national standards body engaged in preparing and implementing standards, operating certification schemes both for products and systems, organization and management of testing laboratories, creating consumer awareness and maintaining close liaison with international standard bodies
Activities rendered by BIS Standards Formulation Product Certification
Laboratories and Hallmarks Management Systems Other Activities HOME CARE MARKET IN INDIA 2014.PPT
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Trends – Summary
Product innovation
Rise of private labels
Trends
Product portfolio diversification
Improved marketing strategies
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Market Competition – Porter’s Five Forces Analysis Threat of New Entrants •x
Impact i1
Impact i4
Bargaining Power of Suppliers •x
Competitive Rivalry
Impact i5
•x
Threat of Substitutes •x
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Impact i2
Bargaining Power of Buyers •x
Impact i3
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Competition – Summary Players
Fabric Wash
Utensil Cleaners
Surface Cleaners
Air Care
Home Insecticides
Public Players
Company 1 Company 2
Company 3
Company 4
Company 5
Company 6
Private Players Company 7
Company 8
Company 9
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Competitive Benchmarking (1/5) Public Trading Comparables Company 1
Company 2
Company 3
Company 4
Market Capitalization (INR bn)
Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio Note: Top 3 Public companies based on the Market Capitalization; Market Capitalization, Share Price and PE ratio is as of 02/07/2014 HOME CARE MARKET IN INDIA 2014.PPT
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Competitive Benchmarking (2/5) Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/3) Operating Margin
%
Net Margin
20 15
a1
c1
a2
c2
b1
10
b2
5 0
Company 1
Company 2
Company 3
• Company 1 recorded operating margin of ‘a1’%, higher than both Company 2 and Company 3 which recorded operating margin of ‘b1’% and ‘c1’% respectively • Company 1 recorded net margin of ‘a2’%, higher than that of Company 2 which recorded net margin of ‘b2’% but lower than that of Company 3 which recorded net margin of ‘c2’%
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Public: Company 1 (1/5) Company Information
Offices and Centres – India
Corporate Address Tel No.
H1
Fax No. Website Year of Incorporation Ticker Symbol
Stock Exchange
Products and Services Category
Head Office
Products/Services
Key People Household Care Name
Designation Chairman
Health Care
Vice Chairman Personal Care
CEO and Director
Foods
Director HOME CARE MARKET IN INDIA 2014.PPT
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Public: Company 1 (2/5) Financial Snapshot
Key Ratios
Total Income INR mn 100,000
Profit / Loss c
b
a
Profit INR mn
Total Income d
50,000
q
p
r
10,000 5,000
s
0
0
2011
2012
2013
2014
Financial Summary
• The company reported total income of INR ‘m3’ in FY 2014, registering an increase of ‘p1’% over FY 2013 • The company earned an operating margin of ‘p2’% in FY 2014, an increase of ‘p3’ percentage points over FY 2013
• The company reported debt to equity ratio of ‘r1’ in FY 2014, a decrease of ‘p4’% over FY 2013
Key Financial Performance Indicators Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
y-o-y change (2014-13)
2014
2013
2012
2011
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios
• The company incurred a net profit of INR ‘m1’ in FY 2014, as compared to net profit of INR ‘m2’ in FY 2013
Indicators
Particulars
Value (02/07/2014)
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
HOME CARE MARKET IN INDIA 2014.PPT
Decline
19
Public: Company 1 (3/5) Key Business Segments
Key Geographic Segments
Segment 1
Segment 3
Segment 1
Segment 2
Segment 4
Segment 2 100%
100% 50% 0%
a1%
a2%
a3%
a4%
c1% b1% d1%
c2% b2% d2%
c3% b3% d3%
c4% d4% b4%
2011
2012
2013
2014
p1%
p2%
p3%
p4%
q1%
q2%
q3%
q4%
2011
2012
2013
2014
50% 0%
Business Highlights (1/2) Description
News • The ‘r1’th largest FMCG concern in India, with revenues of INR ‘m1’
Performance
• Considered the world’s largest ‘t1’ company, it has ‘n1’ carry and forwarding (C&F) agents, ‘n2’ distributors and ‘n3’ retail outlets in India • Company 1 has expanded into the USA, the UK, Australia, South Africa, the UAE, Saudi Arabia, Turkey, Egypt, Oman, Nigeria, Sri Lanka, Nepal, Pakistan, and Bangladesh
Expansion
• In March 2008, Company 1 expanded into personal care retailing with stores branded ‘b1’ • In April 2014, it launched packaged ‘f1’, the first of its kind in India Note: Business segments and geographic segments are based on revenues HOME CARE MARKET IN INDIA 2014.PPT
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Public: Company 1 (4/5) Business Highlights (2/2) Description
News
Acquisitions
• In 2010, it acquired personal care company ‘c1’ of Turkey and hair care company ‘c2’ of the USA
Media Planning
• Company 1 has roped in multiple media planning agencies to promote its products, namely ‘a1’, ‘a2’ and ‘a3’
Corporate Social Responsibility (CSR)
• Company 1 conducts its CSR activities through ‘x1’ • ‘x1’ is a non-profit organization that is engaged in upliftment of rural society in Uttar Pradesh • It provides education, medical aid, employment, veterinary services for livestock and monetary credit
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Public: Company 1 – SWOT Analysis (5/5)
S
W
O
T
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Private: Company 2 (1/5) Company Information
Offices and Centres – India
Corporate Address
H1
Tel No. Fax No. Website Year of Incorporation
Products and Services Category Home Care Cosmetics
Head Office
Products/Services
Key People Name
Designation
Chairman, MD Nutrition & Wellness
Director Director
Personal Care
Director
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Private: Company 2 (2/5) Shareholders of the Company
Name
Ownership Structure
No. of Shares held Segment 1
a%
Note: AGM as of 30th Oct 2013 HOME CARE MARKET IN INDIA 2014.PPT
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Private: Company 2 (3/5) Financial Snapshot Total Income
Total Income INR mn
Profit INR mn
Profit / Loss
8,000
4,000
b a
6,000
3,000
c
4,000 2,000
Key Ratios
q
r
p
2,000
s
1,000
Particulars
y-o-y change (2013-12)
2013
2012
2011
2010
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
0
0
2010
2011
2012
2013
Financial Summary
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
• Company incurred a net profit of INR ‘m1’ in FY 2013, as compared to net profit of INR ‘m2’ in FY 2012
Liquidity Ratios
• It reported total income of INR ‘m3’ in FY 2013, registering a decrease of ‘p1’% over FY 2012
Leverage Ratios
• It earned an operating margin of ‘p2’% in FY 2013, a decrease of ‘p3’ percentage points over FY 2012 • The company reported current ratio of ‘r1’ in FY 2013, a decrease of ‘p4’% over FY 2012
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
HOME CARE MARKET IN INDIA 2014.PPT
Decline
25
Private: Company 2 (4/5) Business Highlights Description
News
Overview
• Company 2 is the India’s leading direct selling FMCG-company • It is a member of the Confederation of Indian Industries (CII) and Federation of Indian Chambers of Commerce (FICCI) • Products are manufactured in India through ‘n1’ third party contract manufacturers • At present, the company is offering ‘n2’ products in ‘n3’ different segments, namely ‘t1’, ‘t2’, ‘t3’, ‘t4’ and ‘t5’
Share Holding Pattern
• Company 2 is a subsidiary of ‘c1’
Distribution Model
• Company 2 is a direct sales company that sells its products directly to consumers through its distributors known as ‘b1’ • Company 2 has a network of over ‘n4’ offices and ‘n5’ warehouses across the country which provides support to distributors in more than ‘n6’ towns • Company 2 also offers free and unlimited training across the country to ‘b1’ and prospects to obtain the expertise and special skills required in direct selling
Home Care
• The company recently launched a new identity logo for the home care segment called ‘c2’ • ‘n7’ new products have also been launched by the company in the ‘t6’, ‘t7’ and ‘t8’ segments • Home care segment contributes ‘r1’% of the revenues of the company from India
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Private: Company 2 – SWOT Analysis (5/5)
S
W
O
T
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